The X-Ray and the Heiress: A reporter takes a roundabout route to learn about NFTs – Rutland Herald | NFTRADIUS

My broken ankle is in Paris Hilton’s art collection.

This one is going to be complicated, so bear with me.

First off, I broke my ankle in a thoroughly embarrassing skiing accident this winter at Pico. The ski patrol and emergency room staff were all lovely.

A few days later, I found myself in a Facebook conversation with Andy Maskin, a dear old college friend who always has been far more technologically savvy than I am. The subject was NFTs.

If you don’t know what an NFT is, you’re in good company. We’ll be giving the whole concept a robust exploration later, but at this point in the narrative, a brief explanation is necessary.

A Non-Fungible Token is a unique computer file that exists on a decentralized network. It is usually, but not always, an image. Copying the image does not copy the NFT — the copy is identical to the eye, but some difference in the code distinguishes the two. This file can then be assigned to an owner.

Andy had taken to making NFTs. One was now in the collection of some “influencer” whose name meant nothing to me; another was in the possession of billionaire Mark Cuban. This was not, however, because either of them had bought NFTs from Andy. Instead, he explained, anyone can put an NFT in anyone else’s “wallet,” for a “gas fee” of about $20. The sender does not need any sort of permission from the recipient.

“So, like, I could pay you to drop a particular NFT into a particular wallet?” I wrote.

Someone hoping to make money off NFTs might do this in the hope that prospective buyers would see their work in a famous person’s collection and conclude it was valuable. I envisioned using this as a form of harassment, or at least friendly ribbing, by sending particular people particular images that might convey particular meaning to them. Andy, who was doing this out of a bent for surrealist humor, replied, showing just how lacking my imagination had been.

“I could drop a picture of your broken foot into Paris Hilton’s digital art collection,” he wrote back.

I felt like I had to after that.

What’s the point?

When I finally got to see one of my X-rays (I felt like I missed out on the “having a broken bone” experience that television had promised me when my emergency room doctor didn’t walk into the exam room, slap my X-ray onto a light board and point at my fracture), I took a picture with my phone and sent it to Andy. I also posted it on Facebook because, of course, I did.

In Philip K. Dick’s alternate history novel, “The Man in the High Castle,” an antiques dealer comes into possession of the Zippo lighter that was in FDR’s pocket when — in the story’s alternate timeline — the president was assassinated. The dealer holds it side-by-side with an identical lighter of the same model, and notes how the only difference between them is that one belonged to the late president and the other did not.

The photo on my phone is identical to the one I sent Andy and the one I posted on Facebook. When Andy made the one I sent him into an NFT, it also became a sort of digital receipt. Creating an NFT doesn’t give him a copyright of the photo — I’m not sure whether that belongs to me or Vermont Orthopedic Clinic, but I know it isn’t his. But the specific copy of the file is his, for whatever that is worth.

Thus, NFTs function as digital collectibles. Of course, not all collectibles are created equal.

“Nobody cares about old T-shirts I might have worn,” said Jacob Park, Castleton University associate professor of economics, who I reached out to because most of the discourse I read on NFTs centers on their investment potential. “A T-shirt that James Dean wore, and you can authenticate it, that might be worth something. … The idea of an NFT is you can authenticate it.”

Park said what he finds most interesting about NFTs is that they have the potential to create a new form of collectible. The same way a fan recently spent roughly $500,000 to buy the last football Tom Brady threw for a touchdown — before Brady decided to come out of retirement, at least — Park said he could imagine someone wanting to own the first tweet by Twitter’s founder.

“The first tweet Jack Dorsey sent, that doesn’t have a physical form,” Park said.

One screenshot of the tweet is just like another, but could an NFT of one of those screenshots effectively make it “the” tweet?

“I do think there is a core economic question about scarcity that’s driving these things,” Park said. “But there are also questions about: What do we mean about art.”

What do we mean about art?

“I would say most people who consider themselves ‘in the art world’ are not crazy about this,” said William Ramage, professor emeritus of art at Castleton University.

Ramage said there is an unending debate about what art is relevant, and that the definition of art is constantly going through “some kind of mechanism.” He said he looked at NFTs as the latest expression of a trend in art that went back to the 1960s.

“Some of it is visually intriguing, but I think for the most part, it’s just furthering the commodification of art,” he said. “Andy Warhol said good art is good business and vice versa.”

(The actual quote is: “Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art.”)

Not long after Warhol made that comment, Ramage said, financial magazines had begun to talk about modern art as a sounds investment. When interest rates shot up in the late ’70s, Ramage said. So did art prices.

“When I was younger, I would go to galleries, and it was possible I could buy some things — it would have cut deep,” he said. “Now, at the most reputable galleries, the average prices are $150,000 to $2 million.”

On the other hand, Ramage said art has gone through phases where the idea of a piece of art was more important than the object.

“This might be another one of those events,” he said. “I don’t know. I don’t think anybody knows, but as long as people are going to buy it, it’s going to fly.”

Buying it

Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, said that while NFTs are distinguishable from cryptocurrencies, they were both in the “same class of digital assets” that has been seeing rapid growth in the state. Vermont had 44,000 crypto transactions totaling $15 million in 2019, he said. It was 224,000 transactions worth $84 million in 2020.

“There’s also been an increase in frauds and scams on cryptocurrency,” he said. “Last year, we had $1 million in frauds reported by Vermonters.”

Pieciak said cryptocurrencies are subject to the same financial regulation as securities, but that the market for NFTs is less tightly regulated.

“If you have a digital piece of art you’re selling someone, that’s a simple financial transaction,” he said. “State regulators are very interested in this space, and we’re watching it. We do know there is considerable fraudulent activity in the marketplace.”

Pieciak said that one major NFT platform has acknowledged that 80% of the NFTs produced through them are either fraudulent or in violation of copyright. That said, a number of NFTs have shot up in price, he said, and a significant portion of those have crashed back down again.

“I wouldn’t consider this an investment,” he said. “I would think of them more like speculation, and when you’re in the world of speculation. you shouldn’t put in money you can’t afford to lose. … These aren’t stable, established markets. The value assigned to them is whatever someone is willing to pay you.”

Pieciak also said people interested in NFTs also should be mindful of the energy used in producing them. The decentralized computer networks require a lot of electricity, he said. One study estimated that the power use to create a single NFT was the equivalent of what an average European Union household used in a month. (Suffice it to say per-capita energy use in the European Union tends to be less than in the United States, at least according to a Google search on the subject.)

“It’s something that’s not evident for most people, but certainly something that needs to be discussed,” he said.

How does this work?

Buying NFTs usually requires cryptocurrency, which, according to Andy, you get by setting up a “crypto wallet” using an online tool like Metamask or Coinbase. The wallet then lets you convert regular money to cryptocurrency. Companies are experimenting with other ways of selling NFTs — The Guardian recently described an NFT vending machine, and as I checked Facebook while writing this I saw an ad for a service letting you buy NFTs with a credit card.

Making NFTs requires a membership at a website that serves as an NFT marketplace — in this case, opensea.com

“In its simplest form, it’s an image you upload and give it a name,” Andy said.

Andy ran the photo of my X-ray through 100 filters and made an NFT of each — which, yes, I feel a little guilty about now that I know that could have powered an EU household for eight years.

These all went into Andy’s wallet, and he emailed me a link and told me to pick one to give to Paris Hilton. Number 33, the pink-tinted one seemed most appropriate. The transfer fee varies by time of day, but Andy said it’s always around $20.

As of last week, it was still there among various drawings and other photos run through filters. It will stay there, Andy said, until someone buys it or whoever manages Paris Hilton’s portfolio spends the $20 or so to transfer it elsewhere to get rid of it. The wallet shows where each NFT came from, and what the owner paid for it.

Andy and I were far from the first people to think of this. Of the more than 1,000 NFTs in Hilton’s collection, Hilton only appeared to have paid for five.

I’m not holding my breath that people are suddenly going to start buying up pictures of my broken ankle because Paris Hilton has one, but I do hope maybe we all learned something.

Gordon Dritschilo is a journalist at the Rutland Herald. His ankle is healing nicely.

gordon.dritschilo @rutlandherald.com

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